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On Monday morning, you take a short position in a Gold futures contract that matures on Wednesday afternoon. The agreed-upon price is $1,000 per ounce.
On Monday morning, you take a short position in a Gold futures contract that matures on Wednesday afternoon. The agreed-upon price is $1,000 per ounce. At the close of trading on Monday, the futures price has risen to $1,015. At Tuesday close, the price rises further to $1,030. On Wednesday afternoon, you close out your position at $980. Assume the number of contract you have is 1 (one) for simplicity. The size of each contract is 100 ounces for the Gold futures. Fill out a Table below showing all your calculations. 1) Calculate your initial margin amount. Assume the initial margin (performance margin) is 5% of the value of the contract. 2) Calculate your maintenance margin (performance bond) amount. Assume the maintenance margin is 3.75% of the value of the contract. 3) Calculate your daily gain or loss in the 3rd column and your cumulative gain or loss in the 4th column based on your position. 4) Calculate your margin account balance in the 5th column and margin call in the last column. 1 Trading Date 2 3 Futures price Daily gain (loss) 4 Cumulative gain (loss) 6 Margin call 5 Margin account balance IM= Mon $1,000 Mon (S) $1,015 Tue (S) $1,030 Wed $ 980 (IM: Initial margin amount, S: Settlement Price) 5) Draw a profit or loss profile (y-axis) of your position depending upon the gold futures prices in the future (x-axis) here
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